BANGKOK RANKED 86TH IN THE WORLDS MOST EXPENSIVE OFFICE RENTS

Real Estate Press Releases Tuesday September 10, 2019 10:55
Bangkok--10 Sep--CBRE Thailand

According to the latest CBRE's Global Prime Office Occupancy Costs report, which tracks the cost of leasing prime office space in 122 markets globally, Bangkok ranked 86th in terms of most expensive prime office rents at THB 1,208 per square metre per month and ranked 46th in terms of biggest annual increase.

Office occupiers continue to seek higher-quality space in markets with robust infrastructure and social amenities, despite the weaker global economic growth in Q1 2019 and worries about the U.S.-China trade war. The race to attract talent by securing the most desirable work environments remains intense. Due to the limited supply and moderate construction amount in pipelines in most cities, prime office occupancy costs have risen to new heights.

These increases persist even as space efficiency and cost management are top concerns for many tenants around the world. The continuing challenge for office occupiers is how to secure quality space and location that meet the increasingly exacting demands of the workforce, while also controlling costs. In this context, measuring superior productivity and user-experience of such space becomes ever more important.

Bangkok is following this global trend. A handful of the best grade A buildings in the central business district (CBD) are achieving rents significantly higher than the average. These buildings are not just in prime locations, but are also technically better than their competitors in terms of air conditioning, lifts, energy efficiency and several other factors.

The highest rents achieved in Bangkok are in Gaysorn Tower at THB 1,500 per square metre per month; Park Ventures at THB 1,300 per square metre per month and Bhiraj Tower at EmQuartier at THB 1,250 per square metre per month, higher than the average CBD grade A rent of THB 1,040 per square metre per month for a small unit.

The rate of increase has, however, slowed over the last 12 months and was below the five-year average. There will be a limited amount of new supply up to 2021; but, after that, new supply will exceed historic levels of growth in demand. Many of the new buildings will be of a very high standard in terms of design, specification and amenities.

For many tenants, there is an incentive to upgrade as they move to agile workplace where there are no fixed desks. The population densities will be greater and so buildings need better lifts and air conditioning systems to deal with the additional staff. Employees also want better amenities and facilities and, if companies want the best talent, they will have to have the best office environment.

The unanswered questions are how many office tenants will be willing to pay a premium rent that is higher than the average grade A rent for a better-quality building and how big will that premium be.
Note:

CBRE defines Prime Office Occupancy Costs as the cost – rent, local taxes and service charges – to occupy the highest-quality office space in each market's highest-quality location. Prime real estate costs can be a gauge of a market's high end – and sometimes of the broader market. To read the full report, click here.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE established an office in Bangkok in 1988, followed by its Phuket office in 2004. CBRE Thailand has grown to be the leading real estate services provider, offering a broad range of integrated services, including property sale and leasing, facilities, transaction and project management; property management; investment management; appraisal and valuation; and strategic research and consulting. Please visit our website at www.cbre.co.th


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